Trading Scared and with Emotions Burns Through your Capital
April 25, 2008 | Leave a Comment
In the past few days we’ve seen some nice runs in stocks and some stocks that have pulled back after gains. An example would be MTL, which we are long for those who are Big Wave Traders. Yesterday the stock was being hammered in the AM. A few members were a big frightened and had no clue what to do. Since we are not day traders it makes no sense for us to be emotional about moves intra-day. By the end of the day, MTL was down 8% but volume wasn’t overwhelming and BOP actually increased. The stock is maintaining its uptrend and has not broken down on large volume through its 50dma or 200dma. We do not panic, Jesse Livermore stated “More money is made waiting on stocks.”
This market is setting up for a big upside run. We do not want to be cutting the stocks that are making moves and rotating into laggards. Stick with your winners!
Money is Made in the Wating Game
April 12, 2008 | Leave a Comment
Stocks are clearly not ready to break to the upside, nor downside. Friday’s painful % decline was not all that bad. GE’s dismal display of earnings had many on the street shaken. Although a GIANT, GE is not a leader in this market and we should be caring about leadership not who is the biggest. GE’s volume accounted for more than 1/4 of the NYSE volume, without NYSE volume would have been pathetic let alone down.
Thursday’s action was definitely a positive sign for the permabull/goldilocks crowd, volume surged while we had price gains. However, Friday’s action is showing that this market isn’t quite ready to break up/down. Jesse Livermore always stated that more money was made by waiting rather than doing. CASH continues to be KING, throwing a large amount of dollars at this market will only get your account to shrink.
We can certainly be taking small positions, we have been here at Big Wave Trading. However, we are keeping a lot of cash on hand so we can be ready for the next big bull run.
Stocks Show Some Life, as Volume Continues to Fade
April 3, 2008 | Leave a Comment
There is certainly a bullish tint on today’s tape, but the low volume continues to linger. Whether or not you believe we’ve ultimately have bottomed, you can not deny the fact that institutional support here is VERY WEAK. Until there is an indication of institutional support this rally will remain suspect.
I would like to see gains on heavier trade and low vol pull backs. Yesterday we got just that, but up volume days continue to be below the 50dma. This market needs many follow-throughs to confirm the action. This isn’t the time to be fully margined, this ain’t March 2003!
Stocks Poised for a Positive Close
March 31, 2008 | Leave a Comment
Stocks are acting like they have support going into the quarters end. The real issue here is with volume. As of 11:35 volume appears to be lower than the run rate on Friday. Not much support for the bulls here, institutional buyers are simply not stepping up to the plate to support this market.
If we continue to move higher and on continued lower volume it will spell trouble for the market. The lack of accumulation is not astounding nor is it surprising to me. This was and still is a classic bull market bounce. No volume and clearly driven by oversold, short covering conditions.
Tomorrow’s session should be more indicative of the action going forward. Lack of volume the past week of action is indicating to me that more selling is just over the horizon.
Stocks move higher without steam
March 25, 2008 | Leave a Comment
The collective yawn you hear is coming from today’s stock market. At 3:55pmEST volume looks to be lower by 10-15% across the board when compared to yesterday’s volume. This is definitely not the type of bullish action you would like to see in a confirmed market rally.
Mid-caps are leading the way along with the NYSE composite index. Boring markets are hard to guage, price action is bullish but with such a dry up in volume. It is hard to get any excitement out of today’s gains.
What Has Changed? Nothing
March 18, 2008 | 1 Comment
Do I have a few nice longs in my scans? Yes. But these longs are of stocks that I am already long and even though it is really nice to be able to add to some winners that you are long, I am still wondering where the perfect charts are? Oh well. I am long 49 great stocks and they all had a great day today including two that DEFINITELY needed to be added to.
But where is the volume on this huge move? Didn’t we just go through this seven days ago. This is so silly and remember those that brag that they caught this bottom are doing so after missing the other 6 bottoms that they called. So a little bit of perspective is in order.
The biggest issue is volume. How can you be up 4% on the Nassy and have volume below the 50 day volume average? I’ll tell you how. You create a massive bear market short-covering rally. That is what we got.
The Selling Continues With Stock Market Indexes Closing Near Their LOD; Charts Can Definitely Make A Difference!
December 15, 2007 | 1 Comment
Friday’s selling came on lower volume but one thing was very clear by the end of the day. The bulls have absolutely no juice and if a gigantic multi-Fed driven liquid injection in the market can’t keep the market up, I am not sure what people think will keep it up. Everyone knows that I only follow the charts to make my trades. And you better believe that is the truth. But sometimes you can look at the macro economy and combine what you see with charts to give you even more conviction than you normally would have with just the charts.
Recently it has become clear that the individual charts that have been showing up in my long scans are deteriorating to the point where there are no perfect charts, only a few green charts, and those that are looking strong are all in defensive industries. When I combine what I see in the long scans to what I see in the short scans, I can see that the numbers on the short scans are growing and growing and the ugliness of the charts are getting pretty nasty. This can be seen on the forums by looking in the area where I post all of my sells. If you notice a lot of stocks are showing up on the ‘nasty’ list.
These charts combined with the downtrends in all the indexes since the November top makes it pretty clear that we are going to be in a rough spot for quite a while. Now, I know some of you do not want to believe that and think that I am crazy. But I am telling you that I have been through enough good and bad and sideways market to have seen it all in the charts. I have also studied the market indexes in TCNet going back to the early 1900’s on the DJIA. So I have learned what bull markets look like, bear markets look like, consolidating markets look like, and even what it looks like when a bottom or top is forming.
SP 500 And Nasdaq Pullback In A Calm Fashion On Lower Volume, While The DJIA And IBD Indexes Continue To Rally; Where Is The Volume And Where Are The New Leading Stocks?
December 7, 2007 | 5 Comments
Overall, it was a pretty choppy and inconsistent day on Friday, but it was still a good day when we take it and consider that we continue to hold well in the face of all the bad news from the subprime area of the economy.
I heard many complain that we did not finish higher today on the Nasdaq. I, however, disagree with them and find it more bullish that we finished a tad lower. That shows me that we are consolidating the gains, since the November 28th follow-through day from the IBD indexes, quite well. If we would have sold off today on heavier volume, then I wouldn’t consider the days action bullish. But the fact the we sold off a little and the volume was lower is exactly how you want to see the market pullback after adding on some solid gains.
Don’t forget that the DJIA finished higher, even though volume was extremely low, and that the IBD 100 and IBD 85-85 indexes finished higher. The big caps and leading stocks seemed to hold up well on a day of profit taking. So the people that were not happy with the Nasdaq do not have to look too far to find some other positives in the market.
Stock Indexes Follow-Through On Day Six Of Rally Attempt; Something Seems Wrong About This Follow-Through
March 22, 2007 | Leave a Comment
Stocks were boring and dead all day long, until 2:15pm when the Fed announced their decision on interest rates. When that happened, stocks exploded to the upside, destroying shorts in the process. The party was not started based on the decision, as everyone expected rates to stay at 5.25%. The fireworks erupted because the Fed left out the hawkish comments and adopted a more neutral rate policy. That sparked non-stop buying on strong volume, into the close.
At the close, the Nasdaq led the way with a 2% rally, retaking its 50 day moving average. The SP 500 and NYSE also retook their 50 day moving averages, with each rallying 1.7%. The SP 600 gained 1.6%, the SP 400 rallied 1.4%, and the DJIA gained 1.3%, rounding out a strong day in the markets. The two indexes that are throwing up a red flag to me are: The IBD 100 and the IBD 85-85 index. The IBD 100 gained 1.8% and the IBD 85-85 gained 1.6%, both lagging the Nasdaq’s gains. Normally at the start of a strong bull market, where we get a follow-through, these indexes will lead the market. They did in all the other bottoms, since October 2002, except the most recent one in July/August. Then these indexes also lagged in what turned out to be the weakest bull market I have been a part of.
Volume was much higher today on the NYSE and the Nasdaq. Nasdaq’s volume came in higher by 26%, but the NYSE only saw a 12% jump in volume. That is not a big volume increase over the previous day on such strong price gains. The other problem with the volume is the fact that on the NYSE it was only even with the 50 day volume average. On the Nasdaq it was only a tad higher than the 50 day volume average. On the best and most powerful follow-throughs that launch strong rallies, the indexes will normally launch a rally on volume well above this average. That did not happen this time, so this is another red flag on the rally.
Stocks Finish Higher Across The Board But Suffer A Late-Day Selloff; Lower Volume Shows Institutions Are Not Interested
March 9, 2007 | Leave a Comment
My girlfriends parents arrived on Maui, today, so I spent all day with the family. Therefore, I was not around at all after the closing bell.
However, I have reviewed my charts and can honestly say that nothing has changed. The gap up this morning and steady drift all day gave way to a selloff sometime after 2pm EST. That was a pretty nasty selloff and that has now happened for the third day in a row. Combine that with the lower volume and you have another technical negative. This bounce should see some volume if it is going to have any staying power. Read more
